In-work tax credit

What it is

In-work tax credit is a payment for families who are in paid work.

Important

If you are coming off an income-tested benefit to start work you may be eligible for an in-work tax credit. You need to confirm your working hours with us before we can start paying you that portion of this. Call us on 0800 227 773.

Who can get it

You can receive an in-work tax credit as long as you're normally in paid work for at least:

30 hours each week as a couple, eg one person works 5 hours and the other works 25 hours, or

20 hours each week as a single parent.

Note

You must "normally" work these hours. If there is a special reason why you don't work those hours at some time, you may still receive an in-work tax credit.

Example

Dale is a single parent who works as a teacher's aide for 22 hours a week. She's contracted to work for the school from February to December although she doesn’t work during the two week term holidays. She's entitled to receive an in-work tax credit from early February until mid-December because she normally works the required hours. She can’t receive an in-work tax credit during the summer holidays because she’s not contracted to work for that period.

Example

Diane is a single parent, who works 25 hours a week for wages. One week she is sick, and can only work 15 hours. Because she normally works 25 hours, she's still entitled to an in-work tax credit for the week she is sick.

Example

Rob worked 40 hours a week as a salesperson. He got a new job as a store manager, also working 40 hours a week. He resigned from his sales job, but had two weeks after he finished before his new job started. He couldn’t receive an in-work tax credit for the two weeks while he was between jobs, because he wasn’t working at all.

If you're not sure if your circumstances qualify as "normally" working the required hours, please contact us on 0800 227 773.

If you normally work less than the required hours but increase your hours from time to time, you may also receive an in-work tax credit for the weeks you work the required hours.

Example

Chris is a single parent who works 15 hours a week as a receptionist. Occasionally she works for six hours on a Saturday for another employer, selling takeaways. Chris qualifies for an in-work tax credit for the weeks she works for 21 hours.

Note

If you occasionally work the required hours, you’ll need to call us on 0800 227 773 to let us know which weeks you qualify for an in-work tax credit. You can keep a record of each time you qualify and let us know before we send out your personal tax summary in July or when you file your Individual tax return (IR3). Or, if you receive your Working for Families Tax Credits payments weekly or fortnightly, you can let us know about each time you qualify during the year.

To qualify for an in-work tax credit you must receive one of the following types of income from your work:

a salary or wage

a shareholder salary, if you are a shareholder-employee in a close company, or

income from a business carried on for profit.

Important

The type of self-employed income you receive may affect your eligibility for an in-work tax credit. Please check with us on 0800 227 773 if you have any of the following:

trust income

self-employed and/or partnership losses

income as a shareholder-employee in a close company

losses from a loss attributing qualifying company

losses from a look-through company (LTC).

As long as you normally work the required hours (see above if you're self-employed) you are still eligible if your income includes the following:

NZ Superannuation

Veteran's Pension

Veteran's Weekly Income Compensation (VWIC)

parental tax credit or paid parental leave if you worked the required hours before taking parental leave

accident compensation for an injury suffered after 1 January 2006, if you worked the required hours before your injury, or

foster care allowance, orphan’s benefit or unsupported child’s benefit, for one or more children, if this is the only benefit you receive from Work and Income.

Example

Adam and Linda are married with three adult children who have left their care, and three school-aged foster children. Adam receives NZ Super and Linda works full-time as a florist. They receive a foster care allowance from Work and Income, and they can also apply for an in-work tax credit from us.

Who can't get it

You can't get an in-work tax credit if you receive:

an income-tested benefit

a student allowance

a parent's allowance, or

children's pension.

Example

Stu is a single dad who shares the care for his son Dan. He's unemployed and receives jobseeker support from Work and Income. He's also got a part-time job as a pizza deliverer for 10 to 15 hours a week. Stu can't apply for an in-work tax credit because he receives an income-tested benefit and also does not work enough hours a week.